20210825INT to Staff 1-4.pdf

Preston N. Carter, ISB No. 8462
Givens Pursley LLP
601 W. Bannock St.
Boise,Idaho 83702
Telephone: [phone]
Facsimile: (208) 388-1 300
[e-mail]
Attomeys for Intermountain Gas Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF INTERMOUNTAIN
GAS COMPATIY'S APPLICATION FOR
AUTHORITY TO CHANGE ITS PRICES
CASE NO.INT-G.2I-04
RESPONSE OF INTERMOUNTAIN
GAS COMPANY TO FIRST
PRODUCTION REQUEST OF THE
COMMISSION STAFF
Intermountain Gas Company, in response to the First Production Request of the Idaho
Public Utilities Commission Staffto Intermountain Gas Company dated August 17,2021, submits
the information below. Confidential information is noted in the responses. The requested
confidential documents will be provided via the Company's Sharepoint site under the terms of the
Protective Agreement.
REQUEST NO. 1: Please provide a copy ofthe Company's most recent risk management
policy.
RESPONSE TO REQUEST NO. r:
The Company's Risk Management Policy dated J:urlre202l is Confidential and included
on the Sharepoint site as "CONFIDENTIAL PR #1 - IGC Risk Management Policy".
Record Lori Blattner-208-377-601s
Sponsor/Preparer:JacobDarrinston. 208-377-6041
Location: 555 S Cole Rd.lD 83707
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REQUEST NO. 2: Please provide a copy of any policies or procedures used to identifu
the amount of capacity reservations maintained by the Company. Please also include the policies
or procedures for determining when the Company releases capacity.
RESPONSE TO REQUEST NO. 2:
The Company policies and procedures around identiffing the amount of capacity
reservations include the following :
The Company uses its Integrated Resource Plan (IRP) process to determine the amount of
firm transportation capacity to be held by Intermountain to serve its residential, commercial, and
industrial customer base now and into the future. Measures assessed in the IRP include, but are
not limited to, the following:
. Company multi-year load duration curves under both normal as well as design
weather conditions
. Customer load growth projections
. Storage capacity
. Cost effective alternatives to storage such as short-term city gate delivered gas supply
availability
In addition to the above the Company monitors the following items when determining the
amount of firm transportation capacity to hold:
. Longer term forward price predictions on the futures market from price points
available to Intermountain,
. Use of capacity segmentations,
. Unsubscribed capacity available on Northwest Pipeline,LLC (NWP), Gas
Transmission Northwest (GTN), Foothills and/or Nova that would deliver gas
supplies on a firm basis to the Company's service territory,
. Existing shippers, if any, interested in permanently releasing their firm capacity.
The Company employs the policies and procedures outlined in Intermountain's IRP and
excerpted below to determine when to release capacity.
0verview
Capacity release was implemented by FERC to allow markets to more efficiently utilize
pipeline transportation and storage capacity. This mechanism allows a shipper with any such
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unused capacity to auction the excess to another shipper that offers the highest bid. Thus,
capacity that would otherwise sit idle can be used by a replacement shipper. The result is a more
efficient use of capacity as replacement shippers maximize annualized use of existing capacity.
One effect of maximizing the utilization of existing capacity is that pipelines are less inclined to
build new capacity until the market recognizes that it is really needed and is willing to pay for
new infrastructure. However, a more fully utilized pipeline can also mean existing shippers have
less operational flexibility.
Intermountain has and continues to be active in the capacity release market.
Intermountain has and continues to obtain significant amounts of unutilized capacity cost
mitigation on NWP and GTN via capacity releases. The Company frequently releases seasonal
and/or daily capacity during periods of reduced demand. Intermountain also utilizes a specific
type of capacity release called segmentation to convert capacity from Sumas to Idaho into two
paths of Sumas to Stanfield and Stanfield to Idaho. Intermountain uses the Stanfield to Idaho
component to take delivery of the lower cost AECO gas supplies that are delivered by GTN to
the interconnect with NWP at Stanfield. IGI Resources, Inc. (IGI) is then able to market the
upper segment of Sumas to Stanfield to other customers.
Capacity release has also resulted in a bundled service called citygate, in which gas
marketers bundle gas supplies with available capacity to be delivered directly to a market's gate
stations. This grants additional flexibility to customers attempting to procure gas supplies for a
specified period (i.e. during a peak or winter period) by allowing the customer to avoid
contracting for year-round capacity which would not be used during off-peak periods.
Pursuant to the requirements under the Services Agreement between Intermountain and
IGI,IGI is obligated to generate the maximum cost mitigation possible on any unutilized firm
transportation capacity Intermountain has throughout the year. In performing this obligation, IGI
must also insure that: 1) in no way will there be any degradation of firm service to
Intermountain' s residential and commercial customers, and 2) that Intermountain always has
first call rights on any of its firm fransportation capacity throughout the year and if necessary
Intermountain has the right to recall any previously released capacity if needed to meet core
market demands.
With the introduction of natural gas deregulation under FERC Order 436 in 1985 and the
subsequent FERC Orders 636,712,712Aand7128, the rules and regulations around capacity
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release transactions for interstate pipeline capacity were developed. These rules cover such
activity as: l) shipper must have title;2) prohibition against tying arrangements and 3) illegal
buy/sell transactions. These rules and regulations are very strict and must always be adhered to
or the shipper is subject to significant fines (up to $l million per day per violation) if ever
violated. IGI is very aware of these regulations and at all times ensures adherence to such when
looking for replacement shippers of Intermountain's unutilized pipeline capacity.
The FERC jurisdiction of interstate pipelines for which Intermountain holds capacity are
NWP and GTN. To facilitate capacity release transactions, all pipelines have developed an
Electronic Bulletin Board (EBB) for which such transactions are to be posted. All released
transportation capacity must be posted to the applicable pipeline EBB and in a manner that
allows a competing party to bid on it.
Capacitv Release Process
Over the past l0 to 15 years, IGI, because of its significant market presence in the Pacific
Northwest, has been able to generate several millions of dollars per year in released capacity
mitigation dollars on behalf of Intermountain for pass-back to its core market customers and to
reduce the cost of unutilized firm transportation capacity rights. In this effort, IGI can determine
what the appetite is in the competitive marketplace for firm transportation releases on NWP and
GTN. It does this via direct communication with third parties or by market intelligence it
receives from its marketing team as it deals with its customers and other markets throughout the
region. However, the most effective way is using the EBB. IGI performs its obligation to
Intermountain in one of two ways. First, if IGI itself is interested in utilizing any of
Intermountain' s unutilized firm transportation capacity, it determines what it believes is a
market competitive offer for such and that is then posted to the EBB as a pre-ananged deal. As a
pre-arranged deal, the transaction remains on the EBB for the requisite time and any third parfy
has the opportunity to offer a higher bid. If this is done, then IGI can chose to match the higher
bid and retain the use of the capacity, or not to match and the capacity will be awarded to the
higher third-party bidder.
Second, if IGI is not interested in securing any unutilized Intermountain capacity then it
will post such capacity to the EBB as available and subject to open bidding by any third party.
As such, the unutilized capacity will be awarded to the highest bidder. It should be noted that
IGI posts to the EBB, as available capacity, certain volumes of capacity for certain periods every
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month during bid week. This affords the most exposure to parties which may be interested in
sectring certain capacity rights. Howevero to date, third parties have chosen to bid on such
available capacity only a handful of times over all these years.
It should also be noted, that to protect the availability of firm transportation to
Intennountain's residential and commercial customers during the year, all released capacity
postings to the EBB, whether pre-arranged or not, are posted as recallable capacity. This means
that Intermountain can recall the capacity at any time, if necessary, to cover its customer
demand.
Record I.ori Blattner-208-177-6015
Sponsor/Preparer:Jacob 208-377-604r
Location: 555 S Cole Rd. Boise.ID 83707
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REQUEST NO.3: Please provide the monthly natural gas purchase invoices for
November 2020 through June 2021, reconciled to the PGA deferrals in the quarterly reports.
RESPONSE TO REQUEST NO.3:
The Confidential files showing the natural gas purchase invoices with a reconciliation to
the PGA deferral accounts are provided on the Sharepoint site. The folder labeled
"CONFIDENTIAL PR #3" includes the purchase invoices for the months requested. The files
"CONFIDENTIAL PR #3 - Invoice Reconciliation to PGA Defenal Accounts" and
"CONFIDENTIAL PR #3 - PGA Deferral Accounts" help to reconcile the purchase invoices to
the relevant PGA deferral accounts.
Record Holder: Lori Blatfirer. 208-377-6015
Sponsor/Preparer: Jacob Darrington. 208-377-6041
Location: 555 S Cole Rd. Boise.ID 83707
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REQUEST NO. 4: Please provide Lost and Unaccounted for Gas amounts by year
reported to Pipeline andHazardous Material Safety Administration (PHMSA) for the five-year
period of 2017 through 202l.Include the Company's Lost and Unaccounted for Gas amounts
reported in20l7 through 2021PGAs and explain any differences between the two.
RESPONSE TO REQUEST NO. 4:
The percent of Lost and Unaccounted for Gas reported to PHMSA and in the PGA are
included on the Sharepoint site as "PR #4 - Percent of Lost and Unaccounted for Gas". The
Company notes that the PHMSA report for the 2021 calendar year will be frled by March 15s of
2022, therefore, the Company provided the percent of Lost and Unaccounted for Gas reported in
the2016-2020 PHMSA reports. The Company further notes that instances of found gas are
reported as zero to PHMSA.
The difference between the Lost and Unaccounted for Gas numbers reported to PHMSA
versus those reported in the PGA filing is timing. The percent of Lost and Unaccounted for Gas
in the PHMSA report covers the reporting period of July 1 - June 30 and the PGA covers
October I - September 30. Because of this, the PHMSA report will include the prior year
unbilled true-up adjustment performed by the Company's accounting department and the PGA
will include the current year unbilled true-up adjustment. Further, the amount of pipeline
imbalance fluctuates from month to month and will not be the same in June, which is the ending
period in the PHMSA report, as it is in September, which is the ending period in the PGA.
Record Holder: Lori Blattrer" 208-377-6015
S .IacobDarrinston- 208-377-6041
Location:555 S Cole Rd.ID 83707
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DATED: August 25,2A21
GTVENS PUR,SLEY LLP
A/'>,?
MonN. Cart€r
Attorneys for Intermormtain Gas Company
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CERTIX'ICATE OT' SERVICE
I certiff that onAugust 25,2021, atrue and correct copy of INTERMOUNTAIN GAS
COMPANY'S RESPONSE TO FIRST PRODUCTION REQUEST OF THE COMMISSION
STAFF was served upon all parties of record in this proceeding via electronic mail as indicated
below:
Commission Staff
Jan Noriyuki, Commission Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise,ID 83714
Dayn Hardie
Deputy Attorney General
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg. 8, Suite 201-A
Boise, lD 83714
Via Electronic Mail
j an.noriyuki@puc. idaho. gov
[e-mail]. gov
Jacob Darrington
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